China, U.S. begin new trade talks

BEIJING -- Chinese and American officials began talks Monday aimed at ending a bruising trade battle between the world's two biggest economies, as Beijing complained over the sighting of a U.S. warship in what it said were Chinese waters.

It was unclear whether the ruckus over the warship might disrupt the working level talks being held at the Chinese Commerce Ministry. The two sides have provided scant information about the discussions.

Both sides have expressed optimism over the potential for progress in settling their tariff fight over Beijing's technology ambitions. Yet neither has indicated its stance has changed since a Dec. 1 agreement by presidents Donald Trump and Xi Jinping to postpone further increases.

Ministry spokesman Lu Kang said Monday during a routine briefing Chinese military aircraft and naval vessels were dispatched to identify the U.S. vessel and warn it to leave the area near disputed islands in the South China Sea.

"We have made stern complaints with the U.S.," Lu said. He said the warship, which he said was the destroyer the USS McCampbell, had violated Chinese and international law, infringed on Chinese sovereignty and undermined peace and stability.

"As for whether this move has any impact to the ongoing China-U.S. trade consultations ... to properly resolve existing issues of all kinds between China and the U.S. is good for the two countries and the world," Lu said.

But he added, "The two sides both have responsibility to create necessary and good atmosphere to this end."

A Pentagon spokesman, Lt. Col. David Eastburn, said "The United States will continue to fly, sail and operate anywhere international law allows."

The American side in the trade talks is being led by a deputy U.S. trade representative, Jeffrey D. Gerrish, according to the U.S. government. The delegation includes agriculture, energy, commerce, treasury and State Department officials.

The talks went ahead despite tensions over the arrest of a Chinese tech executive in Canada on U.S. charges related to possible violations of trade sanctions against Iran.

Trump imposed tariff increases of up to 25 percent on $250 billion of Chinese imports over complaints Beijing steals or pressures companies to hand over technology. Beijing responded by imposing penalties on $110 billion of American goods, slowing customs clearance for U.S. companies and suspending issuing licenses in finance and other businesses.

Economists say the 90-day postponement of tariff increases meant to take effect Jan. 1 may be too short to settle the disputes bedeviling U.S.-Chinese relations.

But cooling economic growth in both countries is raising pressure to reach a settlement.

Chinese growth fell to a post-global crisis low of 6.5 percent in the quarter ending in September. Auto sales tumbled 16 percent in November over a year earlier. Weak real estate sales are forcing developers to cut prices.

The U.S. economy grew at an annual rate of 3.4 percent in the third quarter, and unemployment is at a five-decade low. But surveys show consumer confidence is weakening because of concern growth will slow this year.